Naira Holds Firm Below N1,600 as Market Optimism Grows Despite Global Dollar Jitters

The Nigerian naira maintained a relatively strong position below the N1,600/$ mark during the recent holiday period, trading within a narrow band of N1,587–N1,590 at the unofficial market. Reduced trading activity due to the holidays resulted in lower volumes across Lagos, but the currency’s stability indicated positive market sentiment. The Central Bank of Nigeria’s (CBN) latest data highlighted an uptick in business confidence, especially in agriculture, signaling potential resilience in the country’s economic outlook.

Business leaders across key sectors like manufacturing, energy, and services showed a surprisingly upbeat attitude, projecting the naira would appreciate further. This optimism was mirrored in hiring plans and investment strategies, particularly in agriculture, which topped the confidence charts. Factory owners and traders are preparing to scale operations, betting that the naira’s recent improvements will continue into the year’s second half.

Veteran economist Bismarck Rewane, speaking at the Lagos Business School breakfast, predicted the naira would hover between N1,600 and N1,650 in the near term. He emphasized that despite being about 26.82% undervalued by standard models, the naira’s alignment between official and parallel markets has significantly improved. The current 1–3% spread between the two rates, down from a previous 50–70% gap, signals greater pricing stability and policy effectiveness.

Meanwhile, the global U.S. dollar remains steady but faces pressure amid rising trade tensions and inflation anxieties. At the London market, the dollar held near a six-week low as investors awaited fresh U.S. inflation data. Talks between American and Chinese officials resumed in London, reviving hopes for reduced trade friction, though strategic disputes over technology exports and visas suggest no easy fixes are forthcoming.

Analysts, including UBS’s Dean Turner, warn that the dollar may weaken further as U.S. political instability, inflation fears, and trade uncertainties shake investor confidence. While the U.S. dollar remains a dominant force in global markets, many fund managers are beginning to reduce their exposure. As the world reassesses the dollar’s strength, Nigeria’s naira is quietly firming up—reflecting a rare but promising divergence in global currency trends.

Source: Nairametrics